A Warning to the US Congress and the European Commission

US Congress and the European Commission need to digest EWPC very fast. The political distortions in the power industry at the state level in the USA and at the country level in Europe can be strongly mitigated by performing a paradigm shift to EWPC.


A Warning to the European Union and the US Congress

By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity

Copyright © 2007 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. Please write to javs@ieee.org to contact the author for any kind of engagement.

Dear Mr. Giegler and Mr. Gould

In the post European Confusion and Tail Chasing, Marty Rosenberg reports that “This week comes work that the European Union wants to break open the energy markets. Again. I thought it was supposed to have happened July 1… The initiative is perplexing, particularly considering the fact that the major governments of Europe cannot keep their hands off the energy business.”

Just like in the US, the European Union wants to break open the electricity market with a faulty market architecture and design that keeps “native load” intact.

We ought to Mr. Giegler hero, Sam Insull, the ingenuity of the creation of the deadlock that the US is facing with the federal and state jurisdictional separation that lead to The Anti-System Utility. This is an excellent example of system thinking in action, as the 1st and 7th Law of the Fifth Discipline apply: “Today’s problems come from yesterday’s “solutions” and “Cause and effect are not closely related in time and space.” FERC and its pair in the EU will play its role with a transformation to EWPC, allowing the development of federal wide competition in the US and Europe by 2GRs initially, with worldwide competition later on.

EWPC applies the 8th Law of the Fifth Discipline: “Small changes can produce big results – but the areas of highest leverage are often the less obvious. Two example of high leverage are the change in structure from VIU to EWPC, and the introduction of competitive retailers.

EWPC takes into account the possibility of a transition, in accordance with the 6th Law of the Fifth Discipline: “Faster is slower.”

As state regulated retailers, aka “the enterprise” by Warren Causey, are transformed into federal competitive retailers, the negative political influence will be strongly mitigated. The open market activities in the value chain will change the need of financial capital to production capital, as predictability is reinserted into the industry.

The most important element to enable the open market and the key to predictability is a transportation grid with ultraquality. The motto “reliability first, economy second” is what should drive the industry from now on. As the deadlock is eliminated, new investments, innovations, and jobs with a lot of future, will be created. Financing base load power plants will be easy, under a predictable environment.

US Congress and the European Commission need to digest EWPC very fast. The political distortions in the power industry at the state level in the USA and at the country level in Europe can be strongly mitigated by performing a paradigm shift to EWPC.